CANADA FX DEBT-C$ near flat as oil, greenback both firm

Reuters Staff

3 Min Read

* Canadian dollar at C$1.3265 or 75.39 U.S. cents
* Bond prices higher across the maturity curve
(Adds details, quote, updates prices, previous TORONTO)
By Leah Schnurr
OTTAWA, Nov 10 (Reuters) - The Canadian dollar was little
changed against the greenback on Tuesday, caught between a
modest pick-up in oil prices and a stronger U.S. dollar on
growing expectations the Federal Reserve will begin raising
interest rates this year.
Weak Chinese inflation data fed concern about the global
growth outlook and added pressure on the currency.
The loonie dropped 1 percent on Friday after surprisingly
strong U.S. jobs data bolstered the case for the Fed raising
rates in December, which some in the market had been
questioning.
The Canadian dollar has edged slightly higher since then and
will likely continue to consolidate this week with traders
focused on U.S. data as they try to gauge what the Fed will do,
said Scott Smith, senior market analyst at Cambridge Global
Payments in Toronto.
"That's the elephant in the room right now and the market is
coming around to the idea that a December rate hike is fairly
solidified," he said.
"The loonie is caught in the crosshairs to some extent with
the strength in the U.S. dollar that we're seeing and oil
catching a little bit of traction today but having a hard time
asserting itself north of $45."
The Canadian dollar ended the North American
session at C$1.3265 to the greenback, or 75.39 U.S. cents,
slightly firmer than the Bank of Canada's official close of
C$1.3275, or 75.33 U.S. cents on Monday.
China's consumer price index inflation cooled more than
anticipated in October, following disappointing trade data over
the weekend.
U.S. crude settled up 34 cents at $44.21 a barrel
after a report from the International Energy Agency noted a
sharp drop in oil investment.
Medium-term investors will also take note of a potential
acquisition by Canadian Pacific Railway Ltd of U.S. peer
Norfolk Southern Corp, after news of preliminary merger
talks emerged on Monday.
Canadian government bond prices were higher across the
maturity curve, with the two-year price up 2.5
Canadian cents to yield 0.66 percent and the benchmark 10-year
rising 9 Canadian cent to yield 1.708 percent.
The bond market closed early ahead of Wednesday's national
Remembrance Day holiday.
The Canada-U.S. two-year bond spread was -21.8 basis points,
while the 10-year spread was -63.6 basis points.
(Additional reporting by Fergal Smith in Toronto; Editing by
James Dalgleish)